A federal judge in Seattle ruled Thursday that Changpeng Zhao, founder of cryptocurrency exchange Binance, must remain in the United States for several months until he is sentenced on criminal charges related to anti-money laundering violations.
U.S. District Judge Richard Jones accepted a request from federal prosecutors to impose travel restrictions on Zhao, who received a separate ruling allowing him to return to his home in the United Arab Emirates before sentencing in February. Approved.
Jones reversed that decision, saying Zhao’s “tremendous wealth” overseas and the lack of an extradition treaty between the United States and the UAE made him a flight risk too great.
“The court agrees with the government that this is an unusual case,” Jones wrote in his ruling. “The defendant has enormous wealth and assets overseas and has no connection to the United States.”
Zhao, the Chinese-Canadian entrepreneur who built Binance into the world’s largest cryptocurrency exchange, pleaded guilty last month to failing to maintain an effective anti-money laundering program. He faces 10 to 18 months in prison under federal sentencing guidelines.
Prosecutors argued that the 45-year-old billionaire should remain in the U.S. because he could easily flee and sustain the financial loss of $175 million in bonds and an additional $5 million in collateral. They also suggested that the United Arab Emirates government might protect Mr. Zhao from U.S. extradition attempts because of his citizenship and permanent residency status there.
Zhao’s lawyers ignored these concerns and emphasized their client’s willingness to surrender and admit to wrongdoing. Meanwhile, the government insisted the billionaire would be fine.
“The bail conditions allow the defendant to remain free and travel within the United States, and his family is free to visit him in the United States,” Jones wrote. “This is not an imposition that will burden the defendant’s liberty pending sentencing.”
Jones supported the government’s position but made clear in his ruling that the decision was not based on “the defendant’s alien status or citizenship.”
Zhao helped launch Binance in Shanghai in 2017 and later moved the company’s operations to Malta and the Cayman Islands. U.S. authorities investigated the exchange for facilitating illegal trading.
Last year, Binance agreed to pay millions of dollars in fines and forfeitures for “willful failures” to prevent money laundering and other illegal activities. But no individuals were charged until prosecutors indicted Zhao this November.
U.S. District Judge Richard A. Jones’ decision extends an earlier ruling that allowed Zhao to return to his family in the United Arab Emirates. Federal prosecutors have warned that a Chinese-Canadian businessman may flee due to his wealth and lack of an extradition treaty with the United Arab Emirates.
Last week, a Justice Ministry spokesman told Reuters that Mr Zhao could return to the UAE after Monday evening while awaiting his fate. But even though he pleaded guilty after posting a hefty $175 million bail, those plans changed after prosecutors argued the 45-year-old was too great a flight risk.
“The court agrees with the government that this is an unusual case,” Jones wrote in Thursday’s ruling, citing Zhao’s “immense wealth and assets abroad” as a reason for imposing the travel restrictions.
The ongoing legal drama stems from a federal investigation that found Binance, the world’s largest cryptocurrency exchange Zhao founded in 2017, enabled illegal trading.
Zhao stepped down as CEO last month after the company reached a $4.3 billion settlement related to sanctions and wire transfer violations. Personally, he could face up to 10 years in prison and a $50 million fine under his plea deal with the Justice Department.
Defense lawyers previously argued that Mr. Zhao had already been proven responsible by flying to the United States to face charges. They said it was unnecessary to evict his family just for February’s sentencing.
But federal prosecutors ultimately convinced Jones that Zhao, despite forfeiting his substantial bond, had the means to avoid further legal punishment. It is unclear if and when Jones will be able to schedule a bond hearing.
Currently, the embattled Zhao remains on American soil awaiting his fate. This is the latest change in an industry shaken by the uncertain legal status of cryptocurrencies.
Editor’s note: This story was drafted using Decrypt AI from sources referenced in the text. fact confirmed Written by Ryan Ozawa.
